Harbour Energy makes $10.4 billion bid for Santos

Tuesday, 03 April, 2018

Various news agencies are reporting today that gas producer Santos Ltd has received a $10.4 billion cash takeover offer from US company Harbour Energy. The offer values Santos at $6.50, per share, a 28% premium to the company's last closing share price of $5.07. Santos said it was Harbour Energy's fourth unsolicited bid for the Adelaide-based company.

"The Santos board considers that, based on the indicative offer price of $6.50 per share, it is in the interests of shareholders to engage further with Harbour," Santos said in a statement to shareholders.

The bid from Washington-based Harbour, a private equity-backed firm led by former Royal Dutch Shell Plc executive director Linda Cook, consists of $4.70 per share in cash and a special dividend of $0.28 per share. Harbour plans to fund the takeover through a combination of debt and equity, with J.P. Morgan and Morgan Stanley underwriting $7.75 billion of debt.

"With the support of these providers of capital, Harbour stands ready to move expeditiously towards entering into a Scheme Implementation Agreement and to commencing all necessary government and regulatory review processes," said Cook.

Santos last year rejected a $9.5 billion takeover approach from Harbour Energy in August, saying it undervalued the company. Santos has also disclosed that Harbour had approached the company on two occasions in March, with bids of $6.25 per share and $6.37.

Santos's Australian and offshore gas assets include a prized stake in the Papua New Guinea (PNG) LNG project, run by ExxonMobil Corp.

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